Chapter 13: Inland Marine

Mobile Equipment

A person or business that has custody or control of property, such as mobile articles, machinery or mobile equipment that is not held for sale, on consignment or in the course of manufacture, and that intends to use the property for the purpose for which it was manufactured can purchase an equipment floater. Equipment floaters usually are nonstandard, or manuscripted policies. The perils to be covered, such as fire, lightning, explosion and theft, as well as all deductibles and the limits of liability, all are subject to negotiation between the insured and the insurer.

Bailee's Customers Insurance:

Bailee's customer's policies are purchased by laundries, dry cleaners and other businesses that have customers' property in their care, custody or control. The policies usually are written on a named perils basis. The insurance covers loss of customer goods regardless of legal liability on the part of the Bailee.

Property Held by Bailees

Bailees have custody of others' property for a fee and therefore have a higher degree of responsibility to care for that property while it is in their custody. The bailee's policy also covers their own legal liability for damage to customers' property when they are negligent. A policy that provides coverage under both circumstances is called a dual interest policy.

Camera and Musical Instrument Form

Camera and Musical Instrument form provides coverage for stock of camera, musical instruments and accessories on the premises of a dealer in such equipment. In addition, coverage extends to property away from the premises while in transit, in the custody of employees, and elsewhere.

Cargo Liability Insurance

Cargo liability policies cover the carriers of domestic goods in transit. These policies usually provide coverage on a named perils basis and provide coverage only if the insured carrier is liable for loss or damage to the property.

Contractors' Equipment Floaters

Contractor's equipment floaters often are used to provide the property portion of coverage for vehicles covered for liability insurance under a commercial general liability policy as mobile equipment.

Furrier's Customers Insurance:

Furrier's customer's policies differ from Bailee's customers insurance in several aspects. First, coverage usually is on an open perils basis. Second the policies generally require a customer to state a property value on the receipt he or she is given. The policies then limit coverage to the stated amount. Coverage applies only if such a receipt was given with a stated value.

The insurer is not liable for any part of a loss that has been paid or made good by others.

If the insured has other insurance covering the same loss as insurance under this coverage part, the insurer will pay only the excess over what the insured should have received from the other insurance whether collectible or not. If a loss involves only part of any pair, set, or parts, the insurer may repair or replace any part to restore the pair or set to its value before the loss, or pay the difference between the value of the pair or set before and after the loss. In the event of loss involving property of others in the care, custody or control of the insurers the insurer has the privilege to adjust with the owner. The insurer may settle with the owners of the property, and proceedings brought against the insured. Any recovery or salvage on a loss will accrue entirely to the benefit of the insurer, until the sum it has paid has been made up. The limit of insurance will not be reduced by payment of any claim, in excess, for a total loss of a scheduled item, in which event the insurer will refund the unearned premium on that item. If any person or organization for whom the insurer makes payment under the insurance has rights to recover damages from another party, those rights of recovery are transferred to the insurer.

Inland Marine Categories

Inland marine policies usually are divided into several categories

Other Floaters

Many other types of floaters cover property that may be moved readily from place to place. These include farm equipment floaters, pattern and die floaters, rented equipment floaters and a variety of others.

The insured's duties in the event of loss are:

Notify the police if a law has been broken. Give the insurer prompt notice of the loss, and describe the property involved. As soon as possible, give the insurer a description of how, when and where the loss occurred. Take all reasonable steps to protect the property from further damage, set damaged property aside if feasible and keep a record of expenses related to the loss. Make no statement that assumes any obligation or admit any liability without consent of the insurer Permit the insurer to inspect the property and records proving loss. If requested, submit under oath to questioning by the insurer on matters relating to the claim, with all answers signed by the insured. Within 91 days after receipt of a request from the insurer, send a signed, sworn statement of loss containing the information requested on a form supplied by the insurer. Promptly send the insurer any legal papers or notices received concerning the loss. Cooperate with the investigation or settlement of the claim. If two or more of the policy's coverages apply to the same loss, the insurer will not pay more than the actual amount of loss. Loss payment will "make good" on the claim within 30 days after reaching agreement with the insured, or the date of entry of a final judgment, or the date an appraisal award is filed.

Property of Certain Dealers

Several policies have been developed to insure certain kinds of merchandise, even though it may be kept on the owner's premises. These kinds of merchandise typically are: Individual items of high value, even though the items may be small in size; Property that generally is on the owner's premises, but sometimes may be off the premises because it is loaned, sold on approval or out on consignment; and Property subject to a broad range of perils.

Mail Coverage Form

The Mail Coverage Form provides protection for direct physical loss or damage (unless specifically excluded) to covered property delivered by a specified type of mail service for which a limit of insurance is shown in the declarations. Covered property includes the following items when sent by first class, certified, U.S, Postal Service express, or registered mail: Bonds, stock certificates, certificates of deposit, and other securities; coupons if detached from bonds; and postage and revenue stamps; postal, express, and other money orders; checks, drafts, notes, bills of lading, warehouse receipts, and other commercial papers; other documents and papers of value, except food stamps, unsold travelers checks, and currency.

Commercial Inland Marine Conditions

The commercial inland marine conditions apply in addition to the common policy conditions and any applicable conditions included in the individual inland marine coverage forms. There are two groups of conditions: Loss Conditions There can be no abandonment of insured property to the insurer. An appraisal condition states that if the insured and insurer disagree on the value of property or the amount of loss, either may make a written demand for an appraisal.

Now that we have reviewed what IS considered a covered loss by an Inland Marine Policy, let's take a look at some of the General Conditions that may affect the claim:

The commercial inland marine coverage part will be void in any case of fraud by the named insured relating to the insurance The commercial inland marine coverage part will be void if the named insured intentionally committed concealment or misrepresentation of a material fact concerning this coverage part, the covered property, or the named insured's interest in covered property. No one may take legal action against the insurer under the inland marine coverage part unless there has been full compliance with all the terms of the coverage part, and the action is brought within two years and one day after the insured first has knowledge of the loss. The coverage will provide no benefit to a Bailee. The policy period is that shown in the declarations, and the coverage only applies to "loss" commencing during the policy period. A valuation clause says that, in the event of loss, the value of property will be determined at the time of loss by the following amounts: The actual cash value (ACV) of that property.

Valuable Papers and Records Coverage Form

This form affords "all risk" insurance, covering direct physical loss of valuable papers and records. These classes (along with the mail form discussed below) are known as the filed classes of inland marine insurance. However, the vast majority of inland marine business involves non-filed classes of inland marine. The rates and forms used for the non-filed classes typically do not have to be filed with state insurance departments. As a result, they are easily tailored to the needs of individual risks. That gives inland marine underwriters a great deal of flexibility.

Physicians and Surgeons Coverage Form

This form affords "all risk" insurance, covering medical, surgical, and dental equipment and instruments; business furniture and fixtures; and tenant's improvements and betterments.

Floor Plan Coverage Form

This form affords "all risk" insurance, covering merchandise for sale that has been financed. It covers property at the named insured's risk that has been specified in the declarations and property at the named insured's risk specifically encumbered to a secured lender named in the declarations. It covers the single interest of the dealer or the lending institution or covers their dual interests.

Theatrical Property Coverage Form

This form affords "all risk" insurance, covering scenery, costumes, and theatrical property. Coverage can be written to apply on a specific or blanket production basis.

Equipment Dealers Coverage Form

This form affords "all risk" insurance, covering stock of merchandise or equipment dealers. It covers the named insured's stock in trade consisting of mobile agricultural and construction equipment and similar property of others in the named insured's care, custody, or control.

Jewelers Block Coverage Form

This form affords "all risk" insurance, covering stocks of merchandise for retailers with average inventories up to $250,000. It is written on a non-reporting basis. It also includes the insured's interest in the property of others not in the jewelry trade while the property is in the named insured's care, custody, or control. With respect to property of others in the jewelry trade, coverage applies only to the extent of money the named insured has advanced or the named insured's legal liability for that property. Because of the substantial values at risk, coverage while property is in transit is sharply limited.

Accounts Receivable Coverage Form

This form affords "all risk" insurance, covering the cost of re-establishing records of accounts receivable as well as actual loss due to the inability to collect sums due resulting from insured loss of or damage to these records. Coverage applies while the accounts receivable records are at the named insured's premises, at someone else's premises, or in transit within the coverage territory. However, records in storage away from the named insured's premises are not covered.

Film Coverage Form

This form affords "all risk" insurance, covering the following property owned by or in the care, custody, or control of the named insured and used in the production shown in the declarations: exposed motion picture film, including sound recordings; and magnetic or video tapes that have been properly recorded. (Tape is considered properly recorded if it has been replayed and checked after recording.)

Commercial Articles Coverage Form

This form affords "all risk" insurance, covering two categories of property: cameras, projection machines and related equipment and accessories; and musical instruments and related equipment and accessories used commercially by individuals, churches, schools, institutions, photographers, clubs, hospitals, and bands. It also covers similar property in the named insured's care, custody, or control. Coverage applies wherever the property is located.

Signs Coverage Form

This form affords all risk coverage for neon, fluorescent, automatic, or mechanical electric signs and lamps. It isn't used for billboards or ordinary fixed signs. It covers the named insured's signs and similar property of others in the named insured's care, custody, or control. It must be written on a non-reporting basis.

Dealers Coverage Form

This form covers stocks of merchandise of dealers. Coverage also applies to property at the premises of the insured (in and outside of buildings), in transit, and elsewhere within the coverage territory.

Transit Insurance

Transit insurance covers domestic goods in transit. These policies offer very broad coverage for the loss or damage to the property, with many of the policies written on an open perils basis. The coverage may be on only goods shipped by parcel post or registered mail. Some specific forms include a motor truck cargo-owner's goods on owner's trucks for a firm that transports its own cargo and a transportation floater for a firm that ships goods via a trucking company, a railroad or an airline.

Domestic Goods in Transit

Usually, at least three parties are involved with respect to domestic goods in transit. Because of this, some uncertainty may exist as to who must bear a loss: the shipper, the consignee (the one to whom the goods are being sent) or the people actually involved in handling or moving the goods.